The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929.

[7] The SEC has a three-part mission: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

[8] To achieve its mandate, the SEC enforces the statutory requirement that public companies and other regulated entities submit quarterly and annual reports, as well as other periodic disclosures.

Quarterly and semiannual reports from public companies are crucial for investors to make sound decisions when investing in capital markets.

Though the specific provisions of these laws varied among states, they all required the registration of all securities offerings and sales, as well as of every U.S. stockbroker and brokerage firm.

For example, as early as 1915, the Investment Bankers Association told its members that they could circumvent blue sky laws by making securities offerings across state lines through the mail.

Kennedy added a number of intelligent young lawyers to the SEC staff, including William O. Douglas and Abe Fortas, both of whom later became Supreme Court justices.

The Trading and Markets division oversees self-regulatory organizations (SRO's) such as the Financial Industry Regulatory Authority (FINRA) and Municipal Securities Rulemaking Board (MSRB) and all broker-dealer firms and investment houses.

DERA also assists in the commission's efforts to identify, analyze, and respond to risks and trends, including those associated with new financial products and strategies.

Using data, DERA staff create analytic programs designed to detect patterns identifying risks, enabling commission divisions and offices to deploy scarce resources targeting possible misconduct.

The division's mission is to protect investors, ensure market integrity and support responsible capital formation through risk-focused strategies that: (1) improve compliance; (2) prevent fraud; (3) monitor risk; and (4) inform policy.

The results of the division's examinations are used by the SEC to inform rule-making initiatives, identify and monitor risks, improve industry practices and pursue misconduct.

The SEC announced on September 17, 2008, strict new rules to prohibit all forms of "naked short selling" as a measure to reduce volatility in turbulent markets.

Hedge fund managers, broker-dealers, and institutional investors were also asked to disclose under oath certain information pertaining to their positions in credit default swaps.

The commission also negotiated the largest settlements in the history of the SEC (approximately $51 billion in all) on behalf of investors who purchased auction rate securities from six different financial institutions.

Some of the recommendations included imposing disciplinary action on SEC employees who receive improper gifts or other favors from financial companies, and investigating and reporting the causes of the failures to detect the Madoff ponzi scheme.

[53] Williams concluded in his 66-page Report that Kotz violated ethics rules by overseeing probes that involved people with whom he had conflicts of interest due to "personal relationships".

[54] The report also found that Kotz himself "appeared to have a conflict of interest" and should not have opened his Standford investigation, because he was friends with a female attorney who represented victims of the fraud.

[55] According to former SEC employee and whistleblower Darcy Flynn, also reported by Taibbi, the agency routinely destroyed thousands of documents related to preliminary investigations of alleged crimes committed by Deutsche Bank, Goldman Sachs, Lehman Brothers, SAC Capital, and other financial companies involved in the Great Recession that the SEC was supposed to have been regulating.

[52] Iowa Republican Senator Charles Grassley, among others, took note of Flynn's call for protection as a whistleblower, and the story of the agency's document-handling procedures.

NPR quoted University of Denver Sturm College of Law professor Jay Brown as saying: "My initial take on this is it's a tempest in a teapot," and Jacob Frenkel, a securities lawyer in the Washington, D.C., area, as saying in effect "there's no allegation the SEC tossed sensitive documents from banks it got under subpoena in high-profile cases that investors and lawmakers care about".

[58]On June 5, 2023, the SEC filed 13 charges against Binance entities and its founder Changpeng Zhao, citing allegations of mishandling customer funds and operating without proper registration.

[59][60] The following day, the SEC charged Coinbase for operating as an unregistered securities exchange, broker, and clearing agency, further signaling its intensified scrutiny of major players in the industry.

The SEC applies the Howey Test, derived from a 1946 U.S. Supreme Court decision, which defines a security as "an investment of money in a common enterprise with profits to come solely from the efforts of others.

"[63] The agency has classified many crypto assets as securities based on this test, asserting that their value often depends on the efforts of developers or other central parties behind blockchain projects.

Critics argue that the test is outdated and ill-suited to the decentralized nature of cryptocurrencies, leaving regulatory definitions unclear and fostering uncertainty.

Research by economists found that unpredictable SEC enforcement actions under Gensler, classifying cryptocurrencies as securities without clear guidelines, caused prolonged destabilization in crypto markets.

The goal of the Working Group is to enhance the integrity, efficiency, orderliness, and competitiveness of the financial markets while maintaining investor confidence.

Topics the committee may address include trends and developments affecting investors and market participants, the effects of globalization, and changes in the role of technology and service providers.

The committee is composed of outside experts, including individuals representing the views of retail and institutional investors, small and large funds, intermediaries, and other market participants.